Accommodation to the Times

In 1997, the hospital forged ahead with plans to adapt itself organizationally to the changing marketplace. Dave McRae, with strong involvement from Chief Operating Officer Jim Ross and Senior Vice President Deborah Davis, developed plans to fortify the hospital’s new venture with necessary resources.

On January 6, 1997, PCMH asked the county commissioners to transfer $6.9 million from hospital reserves to three of its subsidiaries: $3.3 million to East Carolina Health, $3.1 million to HealthEast, and $500,000 to East Carolina Health Services.

The hospital had set up East Carolina Health, a not-for-profit corporation, to supervise the hospital’s affiliations with other healthcare providers, to manage contract services, and operate leased hospitals or health systems in eastern North Carolina. Of the funds requested, $2.8 million were for working capital to go to hospitals that might be leased or acquired within a year. PCMH would earmark about $500,000 for startup expenses.

HealthEast was a subsidiary designed to acquire practices, fund their operation, and fund renovations to outmoded facilities. Its primary concentration was on alleviating the shortage of physicians in underserved communities. The entire amount requested would fund primary care practices in the eastern region of the state. Acquiring and operating three additional practice sites would make use of $1.5 million of the funds. The planned sites would be in Mount Olive, Beaulaville, and Wayne County. There were $1.5 million for sites in Hatteras and Avon, and $305,000 to pay the balance for acquiring a Belhaven site and provide it with working capital. Another $500,000 had been sought to renovate a clinic in Dare County, and $295,000 to purchase and operate a site in Manteo.

East Carolina Health Services would use its $500,000 allocation to purchase equipment and provide operating funds. ECHS provided home infusion treatment, home healthcare, and inhalation therapy.

McRae told the board, “The initiative to solidify relationships in the region is absolutely critical, not to success, but to survival.” With managed healthcare inevitably arising in eastern North Carolina as in the rest of the nation, PCMH relied heavily on referrals from other regional hospitals, with about 70 percent of its patients coming from outside Pitt County. The survival and well-being of both the hospital and the medical school were dependent on regional relationships that enabled them to preserve their patient base.

Commissioner Eugene James characterized the hospital’s proposal as “good business.” But John Conway II, an unsuccessful Republican candidate for the board in the past November election, was critical of the fund transfer. “Over a half of it will not even be spent in Pitt County,” he said. “If you’re going to give someone almost $4 million to spend, at least ask them to spend it in Pitt County.” He thought it would be better to put the money into additional property for landfills, additional sheriff’s deputies, or needs of the fire and rescue service. Or the funds could be spent on the Boys and Girls Club, schools, or the courthouse, he said. He added that he had once been worried that the county would sell the hospital, but he no longer was. They weren’t going to sell it, but to “flat out give it away.”

Over Conway’s objections, the commissioners approved the transfer to the three subsidiaries. Jack Holsten, PCMH’s chief financial officer, said that the hospital would pay the money back. The hospital had about $156 million in reserve, covering about $120 million in bond debt and about $32 million of additional liabilities. Under bond covenants, the hospital was required to maintain a reserve of about 1.5 times its debt service. At the time it had about 5.5 times that amount. The reserve provided for more than six months of operation at current daily costs of about $750,000.

Care on Demand

In mid-January, a new unit of the emergency service, called Readi-Care, opened to offer urgent care to 15-20 patients a day. The unit, housed on the second floor of the ambulatory medicine unit, would have two to three beds and be staffed by third-year emergency medical residents and physician assistants. Dr. Nick Benson, chief of emergency medicine at PCMH, said, “We’re trying to put too many patients through the E. D. We just don’t have room for them all.” Between 100 and 150 patients a day were being seen in an emergency department designed for approximately 85 patients a day. The average wait had lengthened to an unacceptable four hours, and Readi-Care was expected to cut the time by at least half.

Patients would be admitted in the normal way and seen by the triage nurse, who would determine whether to send them to Readi-Care or not. The new unit was to be open about six hours each weekday evening—to be adjusted on the basis of need—and 12 hours on Saturday and Sunday.

The Blue Cross Debate

Changes in PCMH’s service patterns went on against the background of competition between patient care providers that continued to heat up in North Carolina as in the rest of the country. Blue Cross companies, once genteel, community-minded institutions, were changing in competition with giant insurance companies for managed-care clients, and some wanted to become for-profit companies that could sell stock and expand their operations. Their executives could receive huge pay increases if their companies should convert to profit-making status.

There was a vigorous debate between critics and supporters of Blue Cross Blue Shield of North Carolina about whether the company should pay large sums to charity if it converted to private status, to compensate for the years of tax exemptions it had enjoyed. The General Assembly could take action on the issue at any time, and its decision would determine how much money, if any, the state would receive to help pay for indigent care and other health programs in the future. PCMH and all other healthcare providers who dealt with the state’s oldest health insurance organization were deeply concerned about any settlement that might be made. If North Carolina is Blue Cross Blue Shield was a charity, then if it started making a profit it would be obliged to turn over its entire worth, perhaps as much as $1 billion, for charitable purposes.

As the 50th Anniversary of Pitt County Memorial Hospital neared, the Blue Cross Blue Shield issue was still unresolved.

UHS Wired

University Health Systems went online in July 1997, with a Website designed to provide Internet access to information about the system, physicians on the hospital staff (with biographical information and photographs), the ECU Division of Health Sciences, and clinical service programs such as the Heart Center and the Leo W. Jenkins Cancer Center. The Web project had been carried out over several months by Marcia Fletcher in Planning and Marketing, Stanton Blakeslee of Eye Integrated Communications, a Greenville firm, and Andy Heinninger, a systems analyst in Information Services. The team developed the Web site’s content and designed a directory of physicians that updated itself from the hospital’s database.

With the first phase of setting up the Web site completed, the design team had already begun working on additions and enhancements to that it would provide listing of employment opportunities at the hospital, as well as pages on educational activities and on the trauma service.

Informatics for the Benefit of Patients

The expanding demands on PCMH generated by growing competition for the privilege of providing healthcare increased the necessity to improve efficiency, reduce costs, and to make patient records both more available to physicians and more useful for measuring treatment effectiveness. As early as 1996, the hospital’s Resource Optimization Committee expressed the importance of consolidating information resources in order to standardize them and to prevent duplication. According to Glyn Young, PCMH administrator for continuity of care, different departments had collected patient information differently on the same patients, and rarely shared it. She said, “Different people had their own needs and thought they needed to do it their own way.” Standardizing documentation procedures in some cases made more work for staff members. In the long run it paid off in efficiency and better patient care.

Ms. Young led the Clinical Information and Support Office, which had been formed to coordinate the collection and sharing of clinical data. It was set up by representatives of the hospital, the ECU School of Medicine, and the medical staff, to enhance patient care through consolidating and organizing information and making it immediately available to caregivers.

There were three areas in which CISO was working:
1. Standardizing physicians’ credentials. CISO was seeking to set up a centralized standard process for     documenting credentials.
2. Evaluating the 40 or so care paths that specified the choice and timing of procedures.
3. Ensuring that discharged patients had the follow-up care they needed.

In November 1997, Dr. James W. Carter, of Pitt Surgical, was appointed medical director of CISO, responsible for building links with the medical staff and for leading the overall operation of the office. Ms. Young said, “He’s a very progressive thinker and is extremely well-versed in managed care.” In addition, his many years as a respected member of the medical staff gave him instant credibility with physicians and staff.

The Diabetes Center

After receiving $630,000 in grants from the Kate B. Reynolds Charitable Trust to fight diabetes in eastern North Carolina, University Health Systems Board of Directors voted in February 1999, to establish the East Carolina University Diabetes and Obesity Center. It would bring the hospital, the school of medicine, and private practitioners together to present a united front against the disease. The grants would fund service and instruction in diabetes care, including self-care and research on diabetes.

The center would begin with Pitt County, then branch out to UHS hospitals in Tarboro, Edenton, Windsor, and Ahoskie to make comprehensive care available to all diabetics in the region. It would furnish support to all of those in the region who took care of diabetes patients or offered instruction in diabetes self-management. Also, it would begin a regional diabetes registry for tracking how well diabetics responded to treatment.

The center would be one of only a few in the country, and the second such program in North Carolina, the other one being at Duke. It appeared that it might be the only center whose main thrust was caring for underprivileged residents in its area who suffered from diabetes. Diabetes was a major health problem in Pitt, Martin, Hertford, and Duplin counties, with 9-18 percent of the population, or 21,000 people, having the disease, as against the average for the whole state of 4.5 percent. In Pitt County alone, 10 percent of the residents surveyed had diabetes, with the rate higher among African-Americans—13 percent reporting they had the disease, compared to 5.3 percent of caucasians.

Dr. Michael Pfeifer, professor of medicine, head of the endocrinology section at ECU, and editor-in-chief of the journal “Diabetes Forecast,” was named medical director of the comprehensive diabetes center. Pfeifer had not only a professional but a personal interest in diabetes, since he had found out in the summer of 1998 that he had Type 2, or late-onset diabetes. Unlike Type 1, this form of the disease does not require insulin shots, but is treatable by diet, exercise, and by avoiding obesity. It is found in 90 to 95 percent of diabetics, and because of the number of obese people, of people that do not get enough exercise, and of people living to old age, the disease has become very widespread.

Dr. Pfeifer said that coordinating the care of diabetics in order to reduce complications (blindness, amputations, heart disease, and kidney disease), would improve the patients’ quality of life and could cut by as much as 50 percent the $30 billion spent each year by Medicare on the disease and its complications.

University Health Systems Hospice Care

Affiliations with community hospitals in many cases provided the impetus for UHS to develop services it had not attempted before. For example, when PCMH leased the Roanoke-Chowan Hospital, it acquired the hospice that the hospital had established as a subsidiary in 1981. Out of Roanoke-Chowan Hospice grew UHS Hospice Care, the first multi-county hospice in the United States. From Greenville and Ahoskie, it served Hertford, Gates, Northampton, Bertie, Chowan, Martin, Greene, Lenoir, Craven, Edgecombe, Washington, Beaufort and Pitt counties. There was a plan to extend service into all 29 counties in the UHS region.

Hospice care is for patients who are expected to live less than six months, as certified by their physician. The emphasis is on controlling symptoms of the terminal condition, pain management, and emotional support for dying patients and their families. The care may be provided in the home, in a residential facility, or in an inpatient setting in the hospital, by a team of caregivers coordinated full-time by doctors and nurses. Social workers, psychologists, artists, ministers, pharmacists, and dietitians may be included, along with trained volunteers. Plans of care are adapted specifically to the patients’ needs, with the goal of enabling the patient to be alert and pain-free for as long as life lasts.

Brenda Hoggard, director of UHS Hospice Care, said “There’s still a need for education. There are so many people you talk to who don’t even know what hospice means. Some patients get aggressive treatment right up until the end, without ever knowing that hospice exists. To me, palliative care may at times yield a better quality of life for terminally ill patients. That’s what we do with hospice.”

In 1996, Medicare had paid for the care of 66.8 percent of hospice patients, private insurers covered 14.6 percent, and Medicaid 9.1 percent. Nearly 60 percent of hospice patients had cancer, 13 percent circulatory diseases, and other diseases accounted for the rest. In the United States during 1996, indigent care accounted for six percent of hospice care. The number of Medicare-certified hospices in the country had increased 6,300 percent between 1984 and 1996. One reason for this was that doctors were overcoming their barriers against telling patients that they had only a few weeks or months more to live.

Phyllis DeAntonio, administrator of the Leo W. Jenkins Cancer Center, observed about the hospice program, “It really helps the patient and the family deal with the process they’re in at that point. It’s an essential part of the care our cancer patients receive at that point. It’s an added advantage because we can work across the spectrum of care.”

Beginning of New Beginnings

The hurricanes in September 1999, with the washed-out highways and swollen streams that followed it during the rest of the year, forced the area into a major crisis that the University Health Systems had handled boldly. There were still a number of projects that had been put aside during the height of the catastrophe.
In November, a settlement with the U.S. Department of Health and Human Services of a lawsuit over Medicare reimbursements for 1985, ‘86, and ’87 brought $4 million to the school of medicine and $1 million to PCMH. The funds balanced to some extent the inordinate expenditures brought about by the flood.

Also in November, Dr. W. Randolph Chitwood, Jr., director of the University Health Systems Heart Center, announced that the Center would run the first trials in the United States with a surgical robot, the da Vinci Surgical System. With it, heart surgery could be carried out without making the usual 12-inch incision to open the chest cavities. Dr. Chitwood said, “With this system, we are miniaturizing the surgeon and placing him inside the heart. The advantage of this device, placing the surgical instruments inside the body cavity, is remarkable. There will be less post-operative pain, shorter hospital stays, and faster patient recovery.”

The medical school received a timely and most welcome major donation near the end of the year. On December 7, the ECU Board of Trustees voted to name the medical school the Brody School of Medicine in honor of an endowment the Brody family of Greenville and Kinston made. They donated $7 million through the Brody Brothers Foundation, and Morris and Lorraine Brody of Greenville gave another $1 million. This brought the family’s total contributions to ECU to more than $22 million.

Hyman Brody, co-administrator of the Brody Brothers Foundation along with his brother, David, said “This is our way of giving back something to the community that gave us so much.” David Brody added, “The Triangle and other regions have so many more resources to pull upon, so it’s important for us to support our own institutions. We both remember the days when people had to drive to Raleigh or Durham with severe illnesses.”

Thirty Years Is an Era

The century’s end was the end of another era in the history of Pitt Hospital.

T. B. Sitterson, known by everyone as “Buck,” PCMH vice president of risk management and outreach, officially retired on December 31, 1999. During his 30 years working for the hospital, during all of its three administrations, Sitterson had been business manager, comptroller, assistant hospital administrator, director of risk management, vice president of support services, and vice president of medical affairs. As Craig Quick, assistant vice president for community relations, who had worked for Sitterson in his first position of business office manager, said “Buck knows almost everybody in eastern North Carolina. He’s a real asset in networking because he’s known and trusted. All of the roles he has played here have drawn on his expertise. I’m not sure we can fill his shoes.”

In the old hospital on Fifth Street, Buck Sitterson’s office had been next door to that of the hospital administrator, C. D. Ward. As Sitterson told it in an interview on February 14, 2000, “My office backed up against C. D. Ward’s office, and he and I needed to talk a lot. There was a closet in the corner of his office that backed up to my office, and we could pass back and forth through it into each other’s offices. The first time we had done that, he had never taken the word “Closet” off his door. He had Kenneth Dews and a group in there one day, and he needed something and he called for me to come in. I walked out of the closet, and at that time Kenneth had not seen what we had done, and he really got a big laugh out of me walking out of the closet. I think C. D. told them he just sort of kept me in there, and when he needed me he just called out for me.”

Financial Challenges

The federal government cut PCMH’s Medicare payments to be made during fiscal year 1999-2000—about 40 percent of the hospital’s revenues—by $4.2 million. This amount was mandated by the Balanced Budget Act of 1997. In spite of the cut, the board of directors of University Health Systems of Eastern Carolina approved an aggressive budget that would improve services to patients, reward employees for high performance, and continue to support development of a superior, cost-effective regional health system.

The budget encompassed PCMH, four regional hospitals, and five other subsidiary corporations. It predicted operating revenues of $494.5 million, operating expenses of $508.8 million, non-operating revenues of $16.4 million, and an operating margin of 3.2 percent, or $33.2 million excess of revenue over expenses. The anticipated strong financial performance would maintain the AA credit rating, outperforming the projections made in the system’s 1998 bond offerings.

The budget called for the hospital to increase its rates by three percent, the second increase after five consecutive years without one. Even with the rise, the hospital’s rates continued to be lower than those of other teaching and large non-teaching hospitals, according to a 1998 study by the Duke Endowment. This showed charges at PCMH to be 33.9 percent less per discharge than other North Carolina teaching hospitals, and 10.4 percent less than 18 non-teaching hospitals in the state. Increased efficiencies in procurement of supplies and other cost reductions that could be made without lowering the quality of patient care had produced about $10 million in savings during 1998-1999 fiscal year, and were expected to continue in the new year.

Patients’ Rights

A U. S. Senate bill established several new rights for the 48 million patients whose healthcare plans were exempt from state regulations. It forbade managed-care plans from charging patients more for using emergency rooms outside of the plan than it did for approved ones. It gave women direct access to gynecologists, allowing obstetricians and gynecologists to serve as primary care providers without referral from “gatekeeper” physicians. It required coverage of clinical trials for cancer patients. Patients were given the option, guaranteed only for employees of companies with 50 or more workers, of visiting doctors not on their plan’s panel. Extra charges could be made for such visits.

For 161 million people in private insurance plans, the bill required health plans to allow women to stay in the hospital after breast cancer for whatever period their physicians determined. It permitted full tax deduction of health insurance for the self-employed, the creation of tax-free medical savings accounts and full deduction of long-term care insurance not subsidized by employers.

The bill created an internal and external appeals process when treatment had been denied, with a $10,000 fine for managed-care plans that did not comply with the ruling of an external appeals panel. Carolina Summit Healthcare, the HMO affiliated with PCMH, was already in compliance with the new legislation, giving women easy access to obstetricians and gynecologists, and paying for emergency visits to the closest appropriate medical facility, including emergency services.

Randall H.H. Madry, president of Carolina Summit, had reservations about some of the measures, including the new appeals process, which he thought added unnecessary steps to the one in place, which allowed appeal to three separate groups of physicians. Also, he thought that there should be safeguards against allowing medical practice lawyers to use the process to enrich themselves without improving healthcare status for patients.